Quote:
Originally Posted by Flash Walken
you haven't explained why though.
What's the threshold where corporate tax cuts have diminishing returns?
According to just about every Albertan I've talked to about this, they don't know or care, they just know that it's low.
Well, how low is too low? You could make the argument that corporate tax rates in Alberta have been too low for years considering the budget deficit the province finds itself in.
So, Enoch, what is the ideal threshold for corporate tax rates in Alberta?
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Sure, I'll play along.
To your point that corporate tax rates were too low in Alberta, as evidenced by the budget deficit, is misleading at best. Low corporate taxes did not create this deficit. Low corporate taxes led to a competitive advantage in Alberta that led directly to higher per capita GDP (and thus a higher overall taxbase). Discussing why we now have a deficit is an automatic thread derailing.
As to your question - there are too many variables at play to answer in a paragraph or two. But one thing is certain: having them significantly higher than your competitors creates a disadvantage.
All corporate taxes are a) passed on to the consumer, or b) result in spending cuts elsewhere (usually payroll) or c) reduce profitability (when neither of the first two are possible). They are inconsistent between industries, and are inconsistent due to accounting practices and paper losses. They accomplish three things:
1) they are unfair and inconsistent between industries and even between companies in the same industry
2) they are a hidden tax that consumers aren't typically aware they are paying (which makes valuating their effectiveness - and even their scope - extremely difficult), and
3) they make the businesses in higher taxed districts unfairly less competitive than businesses in districts with lower corporate taxes.
So following those points through to their logical end suggests that the optimal corporate tax rate is zero.
Note: you asked me a question so I have answered it. But I am NOT going to get into an internet debate (yelling match) about it. I've answered and I'm out.